Social Media ROI: The Difference Between Social Media ROI and Value

The day before my panel at SXSW Interactive, I attended a session entitled, “What’s so BLEEPING Hard About Social ROI?”  There was a long line outside the door, and the room was filled with eager internet marketers, social media managers, and virtually everyone else who thought that this panel was going to provide some magic formula for determining ROI.  Once the panel got going, however, it was easy to see that this session, despite the list of all-star panelists, was yet another regurgitation of the situation with minimal insight for anyone at the intermediate level or beyond. I left after 20 minutes.

So what, indeed, makes social media ROI so (bleeping) hard?  In my next few blog posts, I am going to break down several ways your organization can begin to answer the question, “What is the ROI of social media?”  Don’t expect a miracle formula or an algorithm from me – I hated math and it’s much more complex than a simple equation anyway.  Instead, I’ll give you some tried and true ways to decide where to play in the social space and how to demonstrate the value of doing so.

Social Media ROI is Not the Same as Social Media Value

It’s a simple concept, but many organizations struggle with the notion that every “Like” and every “Retweet” comes along with a dollar sign.  Instead, businesses need to understand that there is a chain of events that will lead to the dollar sign.  It isn’t going to happen overnight, but over the long-term, the value will become clearly visible.  When I am asked for the ROI of social media, I like to pose this question instead, “What’s the ROI of NOT doing it?”

Social media ROI doesn't happen overnight. It's a process.

The Social Media ROI Cycle

I can’t even count on two hands all of the fabulous brands I didn’t know about when I first joined Facebook.  Yet, through the simple action of my friends “liking” the brand, I slowly became more aware of them.  This awareness is the first step in the cycle, followed by me electing to engage with the brand by following them.  This is where the potential customer gets to slow down and let the brand take over for awhile.

Once I’ve elected to learn more about the brand, it’s up to them to earn my trust.  As a lover of all things nature, I liken it to the courting dance of the bird of paradise, one of the most amazing shows on earth.  The brand or business must put on a display that is not only impressive (seriously, the male bird of paradise pulls out all the stops), but trustworthy.  It is showy with sincerity.  It has to be interesting, without being overly ripe with marketing.  After all, I’ve elected to allow your brand into my personal space.  Turn me off with too much messaging and I can just as easily elect you right out of my space, too.

Once you’ve convinced me you are worth my business and I’ve purchased your product you have to retain me as a customer and keep the conversation going. And let’s face it, it is far less expensive to keep me happy than it is to start the cycle all over again at step one. This is where the lines between ROI and value are blurred, and where many marketing execs start to get a little stir crazy.

There is tangible ROI because I’ve made a purchase.  Until I buy again, that number stays the same.  But the value of my engagement with your brand – be it the other people I’ve influenced about your brand, the more aware I am of your brand, or the way I perceive my relationship with your brand and its products – almost always exceeds the dollar amount I have spent.

The sooner you come to terms with the fact that social media is a fluid medium, the sooner you can quantify success.  There is no one way to define success in the social space.  There is no set dollar amount.  There is no one parameter that will work for every brand.  Every initiative within each organizations  will be measured in a different way.

How does one campaign increase brand awareness? How does another build a qualified fan base?  Establish what value you hope to receive with each social initiative, and how it aligns to the bigger picture of your investment, and you’re on your way to determining the ROI of social media.

[author] [author_image timthumb=’on’][/author_image] [author_info]Annalise Kaylor, Director of Social Media Marketing, joined the Intrapromote team in 2011 bringing with her nearly a decade of experience in the social media space. Her portfolio of work includes social media and online marketing campaigns for small, family-owned businesses, as well as Fortune 50 organizations across a variety of industries. Seen as a leader among her peers, Annalise has been featured in interviews with Mashable, Buddy Media reports on industry best practices, and in a variety of other online and print media.[/author_info] [/author]

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  1. Chrysta Bairre Apr 4, 2012 Reply

    Great post, Annalise!

    I liken your insight to the Rule of Seven which suggests a potential customer hears your message seven times before buying your product or service. Social media ROI increases the reach and maximizes awareness of brands, which in turn accelerates the Rule of Seven. The value of a tweet, share, or like is in the potential for future business.

    I’m looking forward to reading the next post in the series.

    Have a grateful day!


    • annalise Apr 4, 2012 Reply

      Thanks, Chrysta, I am glad you enjoyed the post! And you are correct, with the increase of reach and awareness accelerating the Rule of Seven. Great insight to add!

  2. Kris Apr 6, 2012 Reply

    I really appreciate the chart- it helped visualize the whole process. I can’t tell you how helpful your “reverse ROI” question has been for me! Thanks!

  3. Inderjit May 3, 2012 Reply

    Awesome post Annalise,

    You’ve created a real value for Social ROI, believe it in me if you were a brand i would have engaged and be your fan for ever, 🙂

    Looking forward for some more awesome posts from you.

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